Thailand’s Creaking Health System

[george]

Thailand’s Creaking Health System

The government’s lack of spending on healthcare is a scandal—but abusing intellectual property rights won’t help.

BANGKOK: -- This city is not exactly wealthy, but increasingly efficient public transportation, busy (if somewhat chaotic) roads, bustling traders, and very few beggars all give the impression that Bangkok is much richer than many nearby capitals in Southeast Asia. Thailand is indeed wealthier than its neighbors. However, it spends less of its GDP on healthcare than any other government in the region, save for the backward military regime in Burma. Thai health spending is also heading in the wrong direction: it is currently hovering around 3 percent of GDP, down from 3.5 percent a few years ago.

Successive Thai governments have heretofore avoided a serious debate on this issue by blaming their national health woes on the high prices of foreign-made drugs. Many Western activists living in Thailand have joined the chorus and denounced Big Pharma. Both the Thai leadership and the activists seem intent on undermining the patent system and promoting a false picture of callous, greedy drug companies. But costly Western drugs are not the main problem facing the Thai health sector.

Consider Thailand’s HIV-prevention program. It has been successful: new infections are now running at about 6,500 per year, down from nearly 21,000 in 2005. But according to World Health Organization statistics on the drug prices paid by the Thai anti-HIV program, the country’s own production facility, the Government Pharmaceutical Organization (GPO), charged much higher prices than Indian generic companies; indeed, the GPO prices were comparable on some occasions with the prices of branded products made by innovator companies such as Merck. What’s more, the GPO made poor quality products, losing international funding support and also sacrificing a WHO stamp of approval. The new Thai administration is now demanding that drugs be purchased from low-cost producers in India, whose drugs are of better quality than the GPO drugs but are not tested by the most stringent authorities.

To seriously combat cancer and heart disease, the government of Thailand must increase its health spending, not divert blame onto Western companies or break patents.

How things have changed in the past month. For a while it looked as though the Thai government would stop breaking Western patents and would start negotiations to buy the best drugs from private companies at manageable prices. The new health minister, Chaiya Sasomsup, removed the former head of the Thai Food and Drug Adminstration (FDA), who had favored patent-breaking. A new FDA head was installed, but he resigned last month due to corruption allegations. Now Sasomsup has said he will support the patent-breaking on cancer drugs that started under his predecessor. He will also maintain the compulsory license issued on Plavix, a heart disease medication.

But to seriously combat cancer and heart disease, Thailand must increase its health spending, not divert blame onto Western companies. The age-adjusted cancer mortality rate in Thailand is better than the rate in some neighboring countries (such as Cambodia, Laos, and Malaysia), about the same as the rate in Singapore, and marginally worse than the rate in Vietnam. When it comes to heart disease age-adjusted mortality rates, only Singapore has better figures than Thailand. But according to Dr. Suchart Patpong, a local Bangkok doctor I spoke with, the Thai health system is now creaking and its past good results may not be repeated. Lack of drug availability is only one problem. Others, such as poorly paid medical workers and corruption in the health services industry, are exacerbated by the limited government funding. Unfortunately, Bangkok has chosen to cut costs the easy way—by breaking patents on Western drugs.

In the process, Thailand has sabotaged its trade relations with Europe and the United States. The European trade commissioner, Peter Mandelson, has written to the Thai government asking for an explanation of its recent patent-breaking. Thailand currently appears on the U.S. Trade Representative’s (USTR’s) “Priority Watch List” of countries that have abused intellectual property rights, and it has been stripped of certain trade privileges. When the USTR’s annual “Special 301” report on intellectual property comes out later this month, Thailand could be demoted even further and named as a “Priority Foreign Country,” which would bring more adverse trade consequences. In other words, the costs of patent-breaking (in lost foreign investment) could easily be greater than the savings gained by purchasing cheaper drugs.

If Thailand increased its health spending to about 4 percent of GDP, it would be more in line with its neighbors. Of course, 4 percent is still rather low—public health spending as a share of GDP is at least double that in most Western nations—but a 1 percent increase (from the current level of 3 percent) would allow the Thai government to spend over $2 billion more on health. It would be able to afford more good drugs from overseas and build a better healthcare system.

Even though Thailand is still a developing country, allocating an extra $2 billion for health spending would hardly be unreasonable. In recent years, the government has increased military spending by over $30 billion.

But if Bangkok doesn’t boost its health spending, and if it continues to have trouble paying for pricey Western drugs, health activists should direct their anger, not at the pharmaceutical companies, but at the Thai government.

-- Roger Bate (Blog)